The U.S. Energy Information Administration will release its inventory data for last week later today
Oil prices extended gains to fresh one-month highs around $68 on Tuesday, but failed to preserve gains and retreated as traders opted to take some profit amid rising coronavirus cases in India and Japan. India the world’s third-largest oil user, reported another record increase in the daily death toll from COVID-19 and another record rise in cases. As a result, the futures slipped to below the $66 figure in recent trading, staying under pressure during the European hours.
Also on the negative side, the American Petroleum Institute late on Tuesday reported an unexpected build in crude oil inventories of 436,000 barrels for the week ending April 16 while analysts had predicted a draw of nearly 3 million barrels for the week. The U.S. Energy Information Administration will release its inventory data for last week later today.
The move lower in oil prices was exacerbated by reports that the US House Judiciary Committee had passed a bill that would open OPEC to antitrust lawsuits over production cuts, making it illegal for any foreign state to act collectively to limit the production of oil or set prices.
Recovery attempts in the market are being capped by dollar dynamics now. The selling pressure surrounding the greenback has eased somehow as risk sentiment in the global financial markets looks downbeat. Against this backdrop, Brent crude will likely continue to struggle in the short term.
From the technical point of view, oil prices need to hold above the $65.50 region in order to avoid a deeper retreat towards the 20-DMA that arrives today at $64.30. On the upside, a decisive recovery above $67 would pave the way towards the mentioned highs.
In a wider picture, Brent crude remains relatively steady and elevated. However, should COVID-19 cases continue to rise in the coming days and weeks, the futures may derail the current uptrend amid growing worries about the outlook for global energy demand recovery.